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"Investors have eradicated hopes of growth and inflation that had built up in the early months of the year – and they are looking to policy makers for stimulus"

A growing majority of global investors would like to see more
stimulative fiscal policies from governments around the world, amid
resurgent fears about the Greek economy, according to the BofA Merrill
Lynch Survey of Fund Managers for May.

The proportion of global investors saying global fiscal policy is “too
restrictive” has more than doubled to a net 23 percent from a net 11
percent in April. The survey took place from May 4 to May 10, after
elections in France and Greece. Nearly two-thirds of investors are
concerned that Greece will be the source of a negative surprise this
year, up sharply from 48 percent in April.

Fewer investors are convinced that current monetary policy offers enough
stimulus. The number of respondents saying global monetary policy is
“too stimulative” fell to a net 14 percent from a net 25 percent.
Furthermore, expectations of additional stimulus from the European
Central Bank (ECB) are rising. In this month’s survey, 60 percent of
respondents expect the ECB to engage in more direct large-scale
quantitative easing by the end of 2012 – up from 51 percent taking that
view in April.

Investors are looking for greater stimulus as expectations of economic
growth have fallen further and as concerns about inflation have eased
significantly. Only a net 15 percent of the panel expects the global
economy to strengthen in the year ahead, down from a net 28 percent in
February. The proportion of investors predicting inflation to rise in
the coming year fell to a net 2 percent from a net 21 percent in April.

“Investors have eradicated hopes of growth and inflation that had built
up in the early months of the year – and they are looking to policy
makers for stimulus,” said Gary Baker, head of European Equities
strategy at BofA Merrill Lynch Global Research. “The risk to global
growth comes from a change of view on China. Our April and May surveys
show investors are increasingly bullish on China’s growth prospects,”
said Michael Hartnett, chief Global Equity strategist at BofA Merrill
Lynch Global Research.

“Sell in May” - risk-off approach further embedded

Investors have extended the “risk-off” mode that they switched into last
month. BofA Merrill Lynch’s Risk and Liquidity Composite Indicator has
fallen further to 36 points – further below its historical average of 40
points. A net 35 percent of the panel says that they are taking lower
than normal risks – up from a net 21 percent a month ago.

Asset allocators have extended positions in cash and bonds while
reducing exposure to equities. A net 28 percent are overweight cash, up
from a net 24 percent in April. While a net 48 percent were underweight
bonds a month ago, that figure has fallen to a net 33 percent. The
proportion of asset allocators overweight equities shrank to a net 16
percent from a net 28 percent.

Appetite for commodities fell back to its lowest level in seven months.
A net 2 percent of the panel is now underweight commodities compared
with a net 8 percent overweight the asset class in April. Weakening
demand for commodities can an indicator of lower global growth and lower
inflation.

Enthusiasm for U.S. cools; China comeback continues

Appetite for U.S. equities has managed to withstand the second month of
“risk off.” However fewer investors are rushing into the U.S. market,
and the survey indicates demand could fall in the months ahead.

The proportion of asset allocators overweight U.S. equities fell very
slightly to a net 26 percent from a net 27 percent. Looking ahead,
however, the proportion of investors who would most like to overweight
U.S. equities in the coming 12 months fell to a net 6 percent from a net
18 percent a month ago. Investors within the U.S. responding to the
Regional Fund Manager Survey are optimistic about the economy but have
concerns over profits.

At the same time hopes for China have continued to rise. A net 10
percent of the panel expects a stronger Chinese economy in the next 12
months, up from a net 4 percent a month ago. A net 32 percent of global
investors say Global Emerging Markets is the region they most want to
overweight, up from a net 24 percent.

Euro currency fears emerge

With Greece and risks surrounding eurozone sovereign bonds at the
forefront of investors’ minds again, respondents are reducing exposure
to the euro. A net 32 percent of investors are underweight the euro
(unhedged), a significant increase from a net 20 percent in April and
March. Looking ahead, a net 49 percent of global investors say that the
euro is the currency they most expect to depreciate over the next year,
up from a net 32 percent last month.

Survey of Fund Managers

An overall total of 234 panelists with US$526 billion of assets under
management participated in the survey from 4 to 10 May. A total of 173
managers, managing US$526 billion, participated in the global survey. A
total of 125 managers, managing US$270 billion, participated in the
regional surveys. The survey was conducted by BofA Merrill Lynch
Research with the help of market research company TNS. Through its
international network in more than 50 countries, TNS provides market
information services in over 80 countries to national and multi-national
organizations. It is ranked as the fourth-largest market information
group in the world.

BofA Merrill Lynch Global Research

The BofA Merrill Lynch Global Research franchise covers more than 3,300
stocks and 880 credits globally and ranks in the top tier in many
external surveys. Most recently, the group was named Top Global Research
Firm of 2011 by Institutional Investor; No. 1 in the 2012 Institutional
Investor All-Asia survey for the second consecutive year; and No. 2 in
the 2012 Institutional Investor All-Europe and All-Japan surveys. The
group was also named No. 2 in the inaugural Institutional Investor
Emerging Markets Equity and Fixed Income survey, covering Emerging
Europe, Middle East and Africa; No. 2 in the 2011 All-Latin America and
All-America Equity team surveys; and No. 3 in the 2011 Institutional
Investor All-America Fixed Income and All-Brazil Research team surveys.

Additionally, the group was named No. 2 in the Wall Street Journal Best
on the Street 2012 Analysts Survey. The group was also the winner of the
Emerging Markets magazine’s EM Research Global Award for 2010 and 2011.

Bank of America

Bank of America is one of the world's largest financial institutions,
serving individual consumers, small- and middle-market businesses and
large corporations with a full range of banking, investing, asset
management and other financial and risk management products and
services. The company provides unmatched convenience in the United
States, serving approximately 57 million consumer and small business
relationships with approximately 5,700 retail banking offices and
approximately 17,250 ATMs and award-winning online banking with 30
million active users. Bank of America is among the world's leading
wealth management companies and is a global leader in corporate and
investment banking and trading across a broad range of asset classes,
serving corporations, governments, institutions and individuals around
the world. Bank of America offers industry-leading support to
approximately 4 million small business owners through a suite of
innovative, easy-to-use online products and services. The company serves
clients through operations in more than 40 countries. Bank of America
Corporation stock (NYSE: BAC) is a component of the Dow Jones Industrial
Average and is listed on the New York Stock Exchange.

Bank of America Merrill Lynch is the marketing name for the global
banking and global markets businesses of Bank of America Corporation.
Lending, derivatives, and other commercial banking activities are
performed globally by banking affiliates of Bank of America Corporation,
including Bank of America, N.A., member FDIC. Securities, strategic
advisory, and other investment banking activities are performed globally
by investment banking affiliates of Bank of America Corporation
(“Investment Banking Affiliates”), including, in the United States,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, which is a
registered broker-dealer and a member of FINRA and SIPC, and, in other
jurisdictions, locally registered entities. Investment products offered
by Investment Banking Affiliates: Are Not FDIC Insured * May Lose Value
* Are Not Bank Guaranteed.